President George W. Bush and British Prime Minister Tony Blair touting
their good deeds on behalf of the world's poor is enough to make any
opponent of empire and corporate globalization cringe. Perhaps because of
this objectionable sight, progressives have been divided in their response
to the announcement of a major deal on debt cancellation. In advance of
next week's summit in Scotland, the leaders of the G8 industrialized
countries, led by Bush and Blair, agreed to cancel 100 percent of debt
owed by 18 of the world's poorest countries to the IMF, the World Bank and
the African Development Bank.
some on the left have applauded the deal, many others have focused on
asking, "What's the catch?" Some have gone so far as to charge that the
agreement actually does more harm than good by attaching harmful strings
to debt relief.
Certainly, there is reason to be skeptical: You don't have to be a
hardened cynic to wonder about the true scope of Bush and Blair's
compassion. Yet ultimately, the debt deal, while far from perfect, is a
genuine advance -- the product of a decade of increasing social movement
pressure. No doubt, those of us who have campaigned for debt cancellation
or sympathized with the cause should publicize the limits of the agreement
and push for greater change. But we should do this while also celebrating
the progress we have made. Rather than letting the leaders pretend that
the debt cancellation sprang from the goodness of their hearts, we should
insist on giving credit where credit is due -- highlighting the dedication
of activists throughout the world who have moved the injustice of debt to
the fore of international discussion.
Those progressives who have attacked the debt deal emphasize that, even in
announcing the cancellation, G8 finance ministers explicitly reaffirm a
neoliberal economic paradigm. In their statement, the G8 leaders declare
that "boost[ing] private sector development " and "eliminat[ing]
impediments to private investment, both domestic and foreign" remain
central to their model for development. With regard to debt relief, they
state that "good governance, accountability and transparency" will be
required for countries to receive cancellation. Historically, such terms
have been code words for the imposition of structural adjustment on poor
nations. According to G8 ministers, a country practicing "good governance"
is one that wholeheartedly embraces the Washington Consensus.
While the rhetoric of the G8 statement feels disturbing, such posturing
comes as standard fare in official foreign policy declarations. In
practice, the G8 deal does not create new conditions for cancellation. It
merely keeps in place the conditions required by the existing Heavily
Indebted Poor Countries Initiative, or HIPC.
HIPC was created in 1996, and expanded in 1999, in response to a growing
chorus of advocates demanding debt cancellation. The program promised
relief to 42 "qualified" poor countries, largely in sub-Saharan Africa.
However, in order to have debts cancelled under HIPC, the countries had to
go through years of World Bank and IMF-mandated economic restructuring.
Even the countries that did so saw their debt service payments decrease,
on average, by only 33 percent. The final goal of the HIPC program was to
eliminate just 65 percent of the countries' debts-far less than full
the new G8 agreement, 18 countries do receive full debt cancellation from
the IMF and World Bank, and nine other countries may be granted similar
relief at a later date. The 18 chosen countries are those that have
reached "completion point" under HIPC, meaning that they have already
complied with the onerous economic mandates. Since the G8 deal keeps this
"conditionality" in place, new countries wishing to be included in future
cancellation must still endure neoliberal "adjustments." Obviously, this
is a problem.
That said, it is clearly better for poor countries that have already
suffered HIPC conditions to receive full cancellation, rather than
inadequate, partial relief. Full, 100 percent cancellation has been one of
the foundational demands of the debt relief movement. It is something that
has been resisted by wealthy nations through years of mass protests and
persistent lobbying. By affirming the legitimacy of this long-denied
demand, the G8 agreement sets a landmark precedent.
This breakthrough represents a significant victory. It marks a shift of at
least a billion dollars a year in resources back to poor nations. Arguably
the most effective form of aid, debt cancellation allows countries to
retain and use their own funds to advance human development. Contrary to
the claims of conservative critics, it works. Even the limited
cancellation achieved through the HIPC program produced some impressive
results. World Bank statistics show that between 1999 and 2004, the 27
countries that had received partial debt relief under HIPC were able to
almost double their spending on poverty reduction programs -- including
education, health care and clean water. In one example, some 2.2 million
people in Uganda gained access to water as a result of a post-1997 debt
Some large European aid groups, and even progressive stalwarts like John
Pilger, have complained that in order to finance the debt deal, the United
States will be shifting some funding away from World Bank "aid" programs.
Countries will lose in aid what they gain in debt service relief, the
argument goes. However, this is a misreading of the compromise that was
brokered in order to push through the debt deal. While some funds will
indeed be redirected, the United States and other lenders have agreed to
make more money available for Bank "aid" in order to meet demands for a
net increase in funding. For Pilger and the charities, that should qualify
as a victory -- albeit a partial one. For those of us who don't look upon
the defunding of the World Bank as such a bad thing, the question remains
as to why such advocates were so set on "additionality" in the first
Perhaps more important than what has already been gained, the debt deal
puts advocates like those in the Jubilee movement in an excellent place to
advance further demands. Ending conditionality will be easier now that
full cancellation has been accepted as both morally just and politically
feasible. Moreover, G8 nations have progressively less ground on which to
deny relief to countries beyond the 18 already included. In addition to
the 20 other countries still in HIPC, debt relief advocates can devote
their attention to highlighting the plight of indebted poor countries like
Haiti, Nigeria and the Philippines, which were not included in the
previous program because of the specific formulas used by the World Bank
to determine eligibility.
Likewise, the movement is now poised to force the issue of "odious" debt
on the G8, challenging the legitimacy of debt incurred by repressive
regimes in places like Indonesia, Chile and South Africa. While odious
debt, as such, is not included in the current deal, the agreement has
contributed to the momentum that has been building around the issue at
least since the Bush administration campaigned to have Iraq's odious,
Saddam Hussein-era debts forgiven.
Finally, in addition to ending conditionality and lengthening the list of
countries getting relief, activists will be able to leverage the G8
precedent while working to expand the list of institutions canceling their
debts, forcing often-overlooked multilateral creditors like the
Inter-American Development Bank to live up to the established standard.
debt deal both represents a measurable improvement over the previous state
of affairs and puts advocates in a much better position to push for
greater gains. That, in short, is a fine definition of a victory. In a
world of challenges and setbacks, where the obstacles confronting
progressive movements are enormous, it is all too easy to wallow in
despair. If for no other reason than that, we should take care to claim
our wins-and to celebrate them-before continuing with the work ahead.
a writer based in New York City, is an analyst with
Foreign Policy In Focus.
He can be reached via the web site
www.democracyuprising.com. This article first appeared in
Research assistance for this article provided by Jason Rowe.
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